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Chief executive Simon Fox had warned in January that HMV (down 0.75p
to 25.25p) may breach its loan covenants - the conditions under which
banks agree to keep lending it money.

Net debt almost doubled from £88.1m early last year after HMV bought
Mama Group, which owns venues like London's Hammersmi t h Apollo.

KPMG may help HMV renegotiate some of the terms of its borrowing
facilities with its lenders after Fox already admitted April's covenant
test 'will be tight'.

He said last night: 'We have received specialist debt advice for
every year since the group was formed in 1998 and, given our recent
statement on debt covenants, the company will continue to take this type
of advice as prudently appropriate.'

Suppliers rallied round HMV yesterday, pledging to continue supplying
it despite having previously refused to provide stock to other
retailers without insurance.

Credit insurance provides financial safety cover for suppliers as
they wait for the six to eight weeks it takes their retail customers to
pay them.

Without it some are exposed should a retailer collapse.

Both Sony Music and the wholesale arm of Chrysalis Records said they would continue to support HMV.

Peter Lassman, chief executive of Lasgo Chrysalis, said: 'I can tell
you it is business as usual, they enjoy our full support and we are not
concerned about them going out of business. Companies go through
problems some of the time and that does not mean they are bad
companies.'

Problems with credit insurance was one of the key factors in the collapse of Woolworths and Land of Leather.

But JJB Sports, which had a similar issue in 2008, managed to pull through.